Crain's New York - November 5, 2012 - (Page 21)

DIGITAL NEW YORK PLUGGING AWAY: The benefits of cloudbased business models were on display over much of the city last week. For Seamless, what’s a little rain? During hell and high waters, New Yorkers got a quintessential service: deliveries BY MATTHEW FLAMM Like a lot of New Yorkers, Lexie Kier didn’t stock up on supplies for Hurricane Sandy until the last minute. Make that the very last minute:Around 5 p.m.last Monday, the 28-year-old social-media strategist began looking at her phone—using the application for the Seamless food-delivery service—for shops that were open in her neighborhood. “Seamless said East Village Farm & Grocery was still delivering,” she recalled. “We said, ‘That can’t be.’ ” But it was. The deliveryman who braved the howling winds and arrived a little after 7 p.m.—with canned foods, fresh fruits and vegetables, peanutbutter,candles and batteries— got to Ms. Kier’s ninth-floor apartment just in time. The building shut down the elevator 20 minutes later. Ms.Kier’s experience was the kind that Seamless hopes was characteristic of its service last week, which was easily the most challenging in its 13year history.The biggest player in the online food-delivery category, the company has been going through rapid growth in recent years, processing gross sales of $400 million in 2011, up 40% from the prior year. (The privately held firm, which does not disclose revenue, takes a small percentage of each order.) could have resulted in someone ordering from an establishment that was listed as open but in fact was closed, and waiting hours before learning there had been a mistake. Sunny days for tech firms that use cloud Platform helps firms ride out storm mostly unscathed BY JUDITH MESSINA Even as Sandy’s storm clouds devastated the city, there was one friendly cloud in the sky for New York’s tech community—the one that serves the technology infrastructure for almost every young startup in the city. With floods and power outages stalling thousands of businesses in lower Manhattan and throughout the city during this once-in-a-lifetime disaster, employees of cloudbased companies are plugging away remotely from hotels, apartments and Starbucks counters, all in areas of the city and suburbs that were largely unaffected by the storm. Their software, data and client information all reside in the so-called cloud—powerful servers in places as far away as Europe—where companies pay to store and access the data and technology that run their businesses. “Our entire company is cloudbased,” said Matt Minoff, CEO of Selectable Media, a video ad tech company that last year decided to move all of its infrastructure to Amazon’s cloud service in northern Virginia. “All of our systems are up and available [to us] and to our clients via a Web browser.” Street in the Flatiron district and at his home in Murray Hill. For employees who live in lower Manhattan or hard-hit parts of Westchester, Long Island and New Jersey, it’s true that getting access to the Internet in order to connect with the cloud hasn’t been easy. And some companies that use cloud services or house their own equipment at data centers in lower Manhattan haven’t been lucky, either. Lack of power and flooded basements have short-circuited operations in at least two data centers there, disrupting service for clients. Sites with remote support, though, were mostly up and running. Dane Atkinson, CEO of SumAll, a SoHo-based company that collects and analyzes Internet data for small businesses, spent a few minutes last Tuesday rescuing a fish tank in his office at Varick and West Houston streets, but otherwise he and most of his employees have been working from home. Mr. Atkinson said he’s seen little disruption in his business. “The majority of tools and most of our code are in the cloud, and our engineers are definitely able to work on projects,” he said. Similarly, ShopKeep, a cloudbased company at 55 Broad St. in lower Manhattan that provides point-of-sale services to small businesses, also uses Amazon’s Virginia data center, where its operating and customer-care systems, and even its phone system, sit in the cloud. Founder and CEO Jason Richelson said the business has not experienced any disruptions—“other than not being there to answer the phone.” Another Silicon Alley company, SoHo-based CB Insights, in fact, had record sign-ups for its venture research service, thanks in part to having a cloud service provider in Texas. News sites such as Gawker, The Huffington Post and BuzzFeed weren’t so lucky. Internet service provider Datagram went down when the basement of 33 Whitehall St. flooded and fuel stored there could not be pumped to emergency generators. Some websites, including the three news sites, were able to switch to other platforms. Datagram said on its website that it was migrating customers to other locations and, as of early Friday morning, was expecting the imminent arrival of a mobile generator. ‘Cross-trained’ employees Having gone through Hurricane Irene, the company knew it had to be ready to help customers under extreme conditions. Employees were “cross-trained,” so that data-entry staffers in the company’s Salt Lake City-based operations center, for instance,could handle customer care in New York. In addition, on Monday, it set up a phone-messaging system that automatically asked restaurants that had not received an order that day to confirm they were open. “If we don’t hear back from them, we shut them down on the site,” Mr. Zabusky said. Of course, one of Seamless’ biggest assets last week was businesses like East Village Farm & Grocery that are used to providing an almost insane level of service. “It was crazy,” said Paul Shah, one of the store’s owners, of what it felt like as Sandy was hitting New York. He and four other members of his family drove their cars through blacked-out streets, while their deliveryman rode a bicycle with emergency lights, dropping off orders until 9 o’clock. “After the power went down at 8:20, we couldn’t receive the faxes [from Seamless],”he added.“So we finished the ones we had.” Despite all its efforts, Seamless hardly had a smooth week, as both newscom Little disruption Mr. Minoff has been working out of his grandmother’s house in south Brooklyn since the power went off both at the company’s offices on Fifth Avenue and 22nd Bucket brigade Internap, at 75 Broad St., faced the same problem and shut down for about 12 hours on Tuesday until it managed to get a tanker truck to pump fuel from the street level up to its generators on the mezzanine. Peer 1, which houses clients’ servers at 75 Broad St.,came up with a different solution when the lights went out and the basement filled with water. It organized a bucket brigade of sleep-deprived employees, customers and friends who carried half-full 55-gallon diesel-fuel tanks from a truck parked in front of the building up the stairs to the 18th floor to replenish its generators. While Peer 1 shut down some equipment temporarily, most of its customers remained up and running. By Thursday, the 35 stalwarts in the fuel brigade were able to stand down as the recovering building pumped fuel to Peer 1’s generator. “This is a chance to prove ourselves,” said Robert Miggins, Peer 1’s senior vice president of business development. ‘Patient’ customers But last week in the city where takeout never sleeps, not even in a hurricane, midtown-based Seamless was on the spot—at one point or another mustering virtually all of its 300 employees on two continents to track the status of restaurants and their orders in the metro area. As company executives had expected would happen, New Yorkers kept on ordering right through the storm. “We managed through it,” said CEO Jonathan Zabusky, adding somewhat unbelievably about his fellow New Yorkers: “Customers have been incredibly reasonable, patient and understanding” about deliveries that were delayed or never arrived. New York area orders were down about 60% to 70% for much of the week, with around two-thirds of Seamless’ nearly 6,000 listed local restaurants shutting their doors between Monday and Wednesday. Keeping abreast of those closings was crucial. Customers depend on online delivery services like Seamless and its rivals GrubHub and Delivery.com to provide an easy and reliable way to choose a restaurant, order from a menu and pay via a credit-card account—all on one website. A breakdown in the system New Yorkers kept on ordering right through the storm customers and restaurants sometimes found the company overwhelmed. “We were getting orders, and I couldn’t stop them,” said Catalina Gil, who runs El Ranchito Poblano on Flatbush Avenue in Brooklyn and had closed her restaurant early Monday evening. “We couldn’t get in touch with Seamless.” Mr. Zabusky said that frustrated customers were in the minority, but he agreed that “in each of those cases, there are things we could do better.” For the most part, he said, the company’s preparation had worked. Overall,he feels that helping New York area residents even a little bit to get through the storm will pay off in the long run. “We’ll come out of this a stronger company,with stronger relationships with people,” he said. LISTEN to a discussion at CrainsNewYork.com/podcasts November 5, 2012 | Crain’s New York Business | 21 http://www.Delivery.com http://www.CrainsNewYork.com/podcasts

Table of Contents for the Digital Edition of Crain's New York - November 5, 2012

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
EDITORIAL
GREG DAVID
REAL ESTATE DEALS
REPORT: EDUCATION
CLASSIFIEDS
FOR THE RECORD
DIGITAL NEW YORK
SMALL BUSINESS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crain's New York - November 5, 2012